Asistensi-1

Inventory Costing and Capacity Analysis

Asdos: Hidayah Asfaro Saragih
Problem 1
FGK Corporation manufactures and sells 50-inch television sets and uses
standard costing. Actual data relating to January, February, and March of 2012
are as follows:
January February
Unit data:
Beginning inventory
0
Production
1,000
Sales
700
Variable costs:
Manufacturing cost per unit produced $ 900
Operating (marketing) cost per unit
sold
$ 600
Fixed costs:
Manufacturing costs
$400,000
Operating (marketing) costs
$140,000

March

300
800
800

300
1,250
1,500

$ 900

$ 900

$ 600

$ 600

$400,000
$140,000

$400,000
$140,000

The selling price per unit is $2,500. The budgeted level of production used to
calculate the budgeted fixed manufacturing cost per unit is 1,000 units. There
are no price, efficiency, or spending variances. Any production-volume variance
is written off to cost of goods sold in the month in which it occurs.
Required:
1. Prepare income statements for FGK in January, February, and March of
2012 under a) Variable costing and b) Absorption costing
2. Explain the difference in operating income for January, February, and
March under variable and absorption costing
Problem 2
The variable manufacturing costs per unit of FGK Corporation are as follows:
January
$500

Direct material cost per unit

Direct manufacturing labor cost per
unit
100
Manufacturing overhead cost per
unit
300
$900

February
$500

March
$500

100

100

300
$900

300
$900

Required:
1. Prepare income statements for FGK in January, February, and March of
2012 under throughput costing.

Problem 3
PT. Primatron manufactures and sell LED TV 32 inch. Below are data regarding
companys production on January and February 2013:

Selling price of LED TV of 32 inch per unit is Rp 5.000.000. Fixed manufacturing

cost computed with the assumption that production capacity is 100 units per
month. Production volume variance will be closed to cost of goods sold account.
Required:
1. Compute operating income for January and February if PT. Primatron uses
absorption costing? (4 points)
2. Compute operating income for January and February if PT. Primatron uses
Variable costing? (4 points)
3. Can you explain the operating income difference? Show your computation. (2
points)

Asistensi-2
Cost-Volume-Profit Analysis
Problem 1: UTS 2011-2012
PT Newstar is distributor that sell Me-Pad a brand new type of gadget at an
exhibition Newstar Plans to sell Me Pad for $500 each. The company purchase
Me-Pad from manufacturer at $350 each, with the privilege of returning any
unsold units for a full refund. The exhibition offer Newstar with 2 alternatives:
1. A fixed payment 0f $5.000 during exhibition
2. 10% of total revenues earned during exhibition
Assume Newstar incur no other cost
Required:
1. Calculate BEP unit for option 1 and 2
2. At what level of unit sold will Newstar earn the same operating income
under either option? For what range of unit sales will Newstar prefer option
1 over option 2?
3. Calculate margin of safety and degree of degree of operating leverage at
sales of $100 units for two rental option.
Problem 2
A company that sells its single product for $40 per unit uses cost-volume profit
analysis in its planning. The companys after tax income for the past year was
$1.188.000 after applying effective tax rate 40%. The projected costs for
manufacturing and selling its single product in the coming year are in the next
column.
Variable costs per unit:
Direct material
$5
Direct labor
4
Manufacturing overhead
6
Selling
and 3
administrative costs
Total variable costs 18
per unit
Annual fixed operating
costs:
Manufacturing overhead
6.200.0
00
Selling
and 3.700.0
administrative costs
00
Total
annual
fixed 9.900.
costs
000
Required:
a. Calculate the total number of units needed to break even.
b. Calculate sales volume in dollar required in the coming year to earn aftertax net income as the past year.
c. The company has learned that a new direct material is available that will
increase the quality of its product. The new material will increase the
direct material costs by $3 per unit. The company will increase the selling
price of the product to $50 per unit and increase its marketing costs

$1.575.000 to advertise the higher quality product. Calculate the number

of units the company should sell in order to earn a 10% before-tax return
on sales.
Problem 3
Andra company produces two products: squared and circles. The sales units mix
for squares and circles was 1:5. The projected income for the coming year,
segmented by product line, follows:
Squar Circles
Total
es
Sales
$300.0 $2.500.0 $2.800.0
00
00
00
Less: Variable Costs 100.00 500.000 600.000
0
Contribution margin 200.00 2.000.00 2.200.00
0
0
0
Less: Direct Fixed 28000
1.50000 1.528.00
Costs
0
0
Product Margin
172.00 500.000 672.000
0
Less: Common Fixed
100.000
Cost
Operating Income
572.000
The selling prices are $30 for squares and $50 for circles.
Required:
a. Compute the number of units of each product that must be sold for Andra
company to break even.
b. Compute the revenue that must earned to produce an operating income of
10% of sales revenues.
c. Suppose that Andra Company can increase the sales of squares with
increased advertising. The extra advertising would cost an additional
$45.000 and some of the potential purchasers of circles would switch to
squares. In total, sales of squares would increase by 15.000 units, and
sales of circles would decrease by 5.000 units. Would Andra be better off
with this strategy?
Problem 4
PT Fontana menjual produknya dengan harga Rp 60.000 per unit. Berikut
informasi mengenai biaya variabel per unit:
Bahan baku langsung
Rp 16.000
Tenaga kerja langsung
Rp 12.000
Biaya overhead
Rp 7.000
Total biaya manufacturing variabel
Rp 35.000
Biaya penjualan
Rp 7.000
Total biaya variabel
Rp 42.000

Biaya tetap setiap tahunnya sebesar Rp 720.000.000.

a. Untuk mencapai titik impas (break even), jumlah produk yang harus
berhasil dijual PT Fontana setiap tahunnya adalah:
b. Berapa unit yang harus dihasilkan agar menghasilkan laba sebelum pajak
sebesar 10% dari nilai penjualan.
c. Jika biaya manufacturing variable mengalami kenaikan 20% dan biaya
penjualan menjadi Rp 8.000 sementara angka yang lain diasumsikan tidak

mengalami perubahan, berapa jumlah yang harus dihasilkan untuk

mencapai titik impas.

TEMPLATE MASTER BUDGET

Asistensi 3
Soal 1
1. revenues budget
for the year ending june 30
April

may

june

total

April

may

june

total

3a. DM usage budget in Q in $

for the year ending june 30
PHYSICAL UNITS BUDGET
April
dm req
total q dm to be used

may

june

total

price
quantity
total revenues
2. production budget (in units)
for the year ending june 30

bud unit sales

+target end FG
total req
-beg FG
units to be produced

COST BUD
available from beg dm
+to be purchased
dm to be used

3b. DM purchases budget

for the year ending june 30
total
P UNIT BUD
to be used
+target end inv
total req
-beg inv
purchase to be made

April

may

june

COST BUD
purchases

4. DML costs budget

for the year ending june 30
Qproduc
ed

DML/u
nit

total
dml

rate

April

may

june

total

april
may
june
total
5. MOH costs budget
for the year ending june 30
VC
variable manuf overhead

FC
fixed manufacturing
overhead

total MOH
6a. unit costs of end FG inv
for the year ending june 30
cost per unit
of input
DM
DML
MOH
total
6b. ending inventories budget

product
input/unit
tot
output
al

total

for the year ending june 30

April
cost/un
Q
it
total
DM:

may
cost/un
it

total

FG:

total ending
inv

7. COGS budget
for the year ending june 30
April

may

june

may

june

beg FG inv
DM used
DML
MOH
COGM
COGAS
-end FG inv
COGS
8. nonmanufacturing costs budget
for the year ending june 30
April
VC:
var selling and adm
expense

FC:
fixed selling and adm
expense

TC
9. budgeted INCOME STATEMENT
for the year ending june 30

june
cost/un
it
total

April

may

june

rev
-cogs
gross margin
-operating costs:

operating income

10. budgeted BALANCE SHEET

ASSETS:

LIABILITIES:

STOCKHOLDERS'
EQUITY:

TA

TL&SHE

Soal 2
1. revenues
budget
product

TR

Total
2. production
budget
Product
bud unit sales
+target end FG
total req
-beg FG
units to be
produced
3a. DM usage budget in Q in
$
Material
P UNIT BUD
dm req for
dm req for
dm req for

total q dm to be
used
COST BUD
available from
beg dm
+to be
purchased
dm to be used
3b. DM purchases budget
Material
P UNIT BUD
to be used
+target end inv
total req
-beg inv
purchase to be
made
COST BUD
purchases

4. DML costs
budget
product

Qproduced

DML/unit

total dml

rate

total
5. MOH costs
budget
VC

FC

total MOH
6a. unit costs of end FG inv
product

total

cost/unit

input/unit

total

input/unit

DM1
DM2
DM3
DML
MOH
Total
6b. ending inventories
budget
Q
DM:

FG:

total ending inv

7. COGS budget
beg FG inv
DM used
DML
MOH
COGM
COGAS
-end FG inv
COGS
8. nonmanufacturing costs
budget
VC:

FC:

TC

cost/unit

total

total

9. budgeted INCOME
STATEMENT
rev
-cogs
gross margin
-operating
costs:

operating
income

10. budgeted BALANCE

SHEET
ASSETS:

LIABILITIES:

STOCKHOLDERS' EQUITY:

TA

TL&SHE

Asistensi-3
Master Budget and Responsibility Accounting
Problem 1 Master Budget
Royal Company is preparing budgets for the second quarter ending June 30.
Budgeted sales of the companys only product for the next five months are:
April.........
May.........
June.........
July..........
August.....

20,000
50,000
30,000
25,000
15,000

units
units
units
units
units

The selling price is $10 per unit.

Additional data:

The company desires to have inventory on hand at the end of each month
equal to 20% of the following months budgeted unit sales.

On March 31, 4,000 units were on hand.

5 pounds of material are required per unit of product.

Management desires to have materials on hand at the end of each month

equal to 10% of the following months production needs.

The beginning materials inventory was 13,000 pounds.

The material costs $0.40 per pound.

Each unit produced requires 0.05 hour of direct labor.

Each hour of direct labor costs the company $10.

Management fully adjusts the workforce to the workload each month.

Variable manufacturing overhead is $20 per direct labor-hour.

Fixed manufacturing overhead is $50,500 per month. This includes $20,500

in depreciation, which is not a cash outflow.

Royal Company uses absorption costing in its budgeted income statement

and balance sheet.

Manufacturing overhead is applied to units of product on the basis of direct

labor-hours.

The company has no work in process inventories.

Variable selling and administrative expenses are $0.50 per unit sold.

Fixed selling and administrative expenses are $70,000 per month and
include $10,000 in depreciation.

Required:
1.

Sales budget.

2.

Production budget.

3.

Direct materials budget.

4.

Direct labor budget.

5.

Manufacturing overhead budget.

6.

Ending finished goods inventory budget.

7.

Selling and administrative expense budget.

Problem 2 Master Budget (Mid-Term Examination, 27th March 2012)

PT. ABC is a local t-shirt manufacturer. In 2012 management projected that they
can sell 8000 units of various types t-shirt. Data required to develop this years
budget is as follows:
Finished goods inventory on January 1 is 100 units, each costing
a. Rp15.000.
Management planned to maintain its current level of finished goods
inventory at the
end of 2012.
b. Inputs include the following :
Price
Rp
10.000
per
Fabric
meter
Rp
1.000
per
Dye
ounce
Labor

Quantity
1
meter
per
shirt
3 ounces per
shirt
0.25 DLH per
Rp 10.000 per DLH shirt

Inventory at Jan 1
75 meter at Rp9.000
100
ounces
at
Rp750

Overhead costs for 2012 are estimated for fixed and variable (measur
c. components:
ed
in direct labor hour (DLH)). Overhead are allocated to finish product using
direct
labor hour as the cost allocation base.
Fixed
Cost Variable
Cost

Supplies
Power
Maintenance
Supervision
Depreciation
Other

Component
Rp 20.000.000
Rp 60.000.000
Rp 75.000.000
Rp 15.000.000

Component
Rp 500
Rp 1.000
-

Required :
Prepare a partial annual operating budget for the year 2012 :
(1) Production Budget
(2) Direct Material Usage Budget
(3) Direct Labor Cost Budget
(4) Manufacturing Overhead Cost Budget
(5) Cost of Goods Sold Budget
Problem 3: Cash Budget (Mid-Term Examination, 27th March 2012)
Champion Hardware is a hardware wholesaler. All sales are credit sales with the
term of payment 5/10, n/end of month. Information about the stores operation
follows:

December 2011 sales amounted to $500.000

Sales are budgeted at $540.000 for January 2012 and $500.000 for
February 2012
Collection are expected to be 30% in the month of sale within the
discount period, 30% also in month of sale but after the discount period,
and 38% in the month following the sale. Two percent of sales are
expected to uncollectible. Bad debt expense is recognized monthly.
Cost of goods sold is 75% of sales.
A total of 70% of the merchandise for resale is purchased in the month
prior to the month of the sale, and 30% is purchased in the month of the
sale. Payment for merchandise is made in the month following the
purchase. The company always take the benefit of 2% discount offered by
the supplier for payment before the 10th of the month.
Annual operating expenses for 2012 is budgeted for $1.600.000. From
this amount $1.000.000 is fixed cost which include $200.000 depreciation
expense. The remaining operating expense is considered variable. All
operating expense will be paid as incurred. The budgeted annual
operating expenses is based on the expected annual sales $6.000.000

The companys balance sheet of December 31,2011 is as follows :

Champion Hardware Inc.
Balance Sheet
December 31, 2011
Assets
Cash
$
Account Receivable (net $75.000 allowance for uncollectible
accounts)
$

44.000

Inventory
Property and
depreciation)

280.000

1.724.000

2.238.000

Total Assets

Equipment

(net

of

$1.180.000

190.000

accumulated

Liabilities and Stockholders Equity

Account Payable

324.000

Common Stock

1.590.000

Retained Earning

324.000

Total Liabilities and Stockholders Equity

2.238.000

Required :
1. Prepare a cash budget for January 2012 in detail (show your computation)
to show the expected cash balance at the end of January 2012.
2. Suppose you are preparing a budgeted balance sheet as of January 31,
2012. Please show the balance for the following account :
a. Cash
b. Account Receivable
c. Account Payable
If the company has minimum cash balance policy of $40.000, how this will affect
your answer.

Asistensi-4
Flexible Budgets, Variances, and Management Control 1

Problem 1 :
Connor Companys budgeted prices for direct materials, direct manufacturing
labor, and direct marketing (distribution) labor per attach case are $40, $8, and
$12, respectively. The president is pleased with the following performance report:

Direct materials
Direct manufacturing labor
F
Direct marketing (distribution) labor
F

Actual Costs
Static
Budget
Variance
$364,000
$400,000
$36,000 F
78,000
80,000
2,000
110,000

120,000

10,000

Actual output was 8,800 attach cases. Assume all three direct-cost items shown
are variable costs. Is the presidents pleasure justified? Prepare a revised
performance report that uses a flexible budget and a static budget.
Problem 2 :
Bank Management Printers, Inc., produces luxury checkbooks with three checks
and stubs per page. Each checkbook is designed for an individual customer and
is ordered through the customers bank. The companys operating budget for
September 2012 included these data:
Number of checkbooks
15,000
Selling price per book
$ 20
Variable cost per book
$8
Fixed costs for the month
$145,000
Number of checkbooks produced and sold
12,000
Average selling price per book
$ 21
Variable cost per book
$7
Fixed costs for the month
$150,000
The executive vice president of the company observed that the operating
income for September was much lower than anticipated, despite a higher-thanbudgeted selling price and a lower-than-budgeted variable cost per unit. As the
companys management accountant, you have been asked to provide
explanations for
the disappointing September results.
Bank Management develops its flexible budget on the basis of budgeted
per-output-unit revenue and per-output-unit variable costs without detailed
analysis of budgeted inputs.
1. Prepare a static-budget-based variance analysis of the September
performance. qu
2. Prepare a flexible-budget-based variance analysis of the September
performance.
3. Why might Bank Management find the flexible-budget-based variance
analysis more informative than the static-budget-based variance analysis?
Explain your answer.

Problem 3 :
Market-Share and Market-Size Variances. Rhaden Company produces
sweat-resistant headbands for joggers. Information pertaining to Rhadens
operations for May 2011 follows:
Actual
Budget
Units sold

230,550

220,000

Sales revenue

$3,412,140

$3,300,000

Variable cost ratio

68%

64%

Market size in units

4,350,000

4,400,000

1. Compute the sales volume variance for May 2011.

2. Compute the market-share and market-size variances for May 2011.
3. Comment on possible reasons for the variances you computed in requirement
2.
Problem 4
PT Alam Sejahtera is a manufacturing company in the snack industry. Earlier in
2013, the management decided to introduce a new product called Kacang
Premium, an assortment of nuts in a pack, and it will be manufactured in the
Karawang Barat Plant. As its name suggests, Kacang Premium uses only the best
ingredients and is seasoned with a secret ingredient. Kacang Premium will be
sold in packs of 150 grams, and made in batches. The Product Development
Manager has proposed that a batch of Kacang Premium (consisting of 200 packs)
consists of ingredients as below:
Ingredient
Quantity per batch
Price of input
Pistachio

100 boxes

Rp 50.000 per box

Walnut

80 boxes

Rp 35.000 per box

Macadamia

120 boxes

Rp 25.000 per box

Secret Seasoning

20 boxes

Rp 70.000 per box

During the second quarter of 2013, the Production Manager of PT Alam Sejahtera
reported that Karawang Barat Plant has manufactured 150 batches of Kacang
Premium, and it has been distributed in several upscale supermarkets in
Jabodetabek. The quantity of inputs and price of inputs are reported as below.
Ingredients
Actual Quantity
Actual Cost
Actual Mix
Pistachio

16.640 boxes

Rp 856.960.000

32,5%

Walnut

11.520 boxes

Rp 402.048.000

22,5%

Macadamia

19.968 boxes

Rp 539.136.000

39%

Secret Seasoning

3.072 boxes

Rp 192.000.000

6%

Total Actual

51.200 boxes

Rp 1.990.144.000

100%

1. What is the budgeted cost of direct materials for the 30.000 packs?
2. Calculate the total direct materials efficiency variance.

3. Calculate the total direct materials mix and yield variances. What are these
variances telling you about the 30.000 packs produced this quarter? Are the
variances large enough to investigate?
Problem 5
Bapak Aria employs three workers in his doll making workshop. The first worker
is Ibu Setya and she has been making dolls for 25 years. She is paid Rp 150.000
per hour. The second worker is Ibu Laras, and is paid Rp 100.000 per hour. The
third worker is Ibu Ditha, and is paid Rp 95.000 per hour. According to the
statistic, one doll is made in 6 hours and budgeted as follows:
Quantity
Price per hour of Cost of one doll
labor
Ibu Setya

2 hours

Rp 50.000,-

Rp 100.000,-

Ibu Laras

3 hours

Rp 30.000,-

Rp 90.000,-

Ibu Ditha

1 hours

Rp 25.000,-

Rp 25.000,-

Each doll is budgeted to be made with 6 hours of direct labor, comprising of

33,33% of Ibu Setyas labor, 50% of Ibu Laras labor, and 16,67% of Ibu Dithas
labor. However, sometimes the three workers may work more or less hours than
budgeted with no reduction in quality of dolls made.
In the month of December, Bapak Arias workshop created and sold 180 dolls.
Actual direct labor costs are as follows:
Ibu Setya (342 hours)
Rp 17.100.000,Ibu Laras (540 hours)

Rp 16.200.000,-

Ibu Ditha (225 hours)

Rp 5.625.000,-

Total actual direct labor cost

Rp 38.925.000,-

1. What is the budgeted cost of direct labor for 180 dolls?

2. Calculate the total direct labor price and efficiency variance.
3. For 180 dolls, what is the total actual amount of DL used? What is the actual
DL input mix percentage? What is the budgeted amount of the three Ibus labor
that should have been used for the 180 dolls?
4. Calculate the total direct labor mix and yield variances.

Asistensi-5
Flexible Budgets, Variances, and Management Control 2
Problem 1: Activity-based costing, batch-level variance analysis.
Jo Nathan Publishing Company specializes in printing specialty textbooks for a
small but profitable college market. Due to the high setup costs for each batch
printed, Jo Nathan holds the book requests until demand for a book is
approximately 500. At that point Jo Nathan will schedule the setup and
production of the book. For rush orders, Jo Nathan will produce smaller batches
for an additional charge of $400 per setup. Budgeted and actual costs for the
printing process for 2012 were as follows:
Static-Budget

Actual Results

Amounts
Number of books produced

300,000

Average number of books per 500

324,000
480

setup
Hours to set up printers

8 hours

8.2 hours

Direct variable cost per setup-

$40

$39

$105,600

$119,000

hour
Total fixed setup overhead costs

1. What is the static budget number of setups for 2012?

2. What is the flexible budget number of setups for 2012?
3. What is the actual number of setups in 2012?
4. Assuming fixed setup overhead costs are allocated using setup-hours, what is
the predetermined fixed setup overhead allocation rate?
5. Does Jo Nathans charge of $400 cover the budgeted direct variable cost of an
order? The budgeted total cost?

6. For direct variable setup costs, compute the price and efficiency variances.
7. For fixed setup overhead costs, compute the spending and the productionvolume variances.
8. What qualitative factors should Jo Nathan consider before accepting or
rejecting a special order?
Problem 2: Direct Manufacturing Labor and Variable Manufacturing
Overhead Variances.
Sarah Beths Art Supply Company produces various types of paints. Actual direct
manufacturing labor hours in the factory that produces paint have been higher
than budgeted hours for the last few months and the owner, Sarah B. Jones, is
concerned about the effect this has had on the companys cost overruns.
Because variable manufacturing overhead is allocated to units produced using
direct manufacturing labor hours, Sarah feels that the mismanagement of labor
will have a two fold effect on company profitability. Following are the relevant
budgeted and actual results for the second quarter of 2011.
Budget
Information

Actual Results

Paint Set Production

25.000

29.000

Direct manufacturing Labor Hours per

Paint Set

2 Hours

2,3 Hours

Direct manufacturing Labor rate

$ 10/Hours

$ 10,4/Hours

Variable manufacturing overhead rate

$ 20/Hours

$ 18,95/Hours

Required
1. Calculate the direct manufacturing labor price and efficiency variances and
indicate whether each is favorable (F) or unfavorable (U).
2. Calculate the variable manufacturing overhead spending and efficiency
variances and indicate whether each is favorable (F) or unfavorable (U).
3. For both direct manufacturing labor and variable manufacturing overhead, do
the price/spending variances help Sarah explain the efficiency variances?
4. Is Sarah correct in her assertion that the mismanagement of labor has a
twofold effect on cost over-runs? Why might the variable manufacturing
overhead efficiency variance not be an accurate repre-sentation of the effect
of labor overruns on variable manufacturing overhead costs?

Problem 3: Flexible Budgets, Direct-Cost Variances, and Overhead-Cost

Variances (UTS 2012/2013)
The following information is provided to assist you in evaluating the performance
of Odysius, Inc. :

Actual Cost:
Direct Material Purchased and Used

188,700

(102,000

pounds)
Direct Labor
Manufacturing Overhead

$ 140,000 (10,700 hours)

$ 204,000 (61% is variable)

Standard Cost per Unit:

Direct Material

$ 1.65x5 pounds per unit

output
Direct Labor

$ 14.00 per hour x 0.5

hour/unit
Variabel Overhead

11.90

per

direct-

labor hour
Production Budget:
Direct Material

$ 165,000

Direct Labor

$ 140,000

Manufacturing Labor

$ 199,000

Variable overhead is applied on the bases of direct

labor hours. The

companys actual production and sales was 21,000 units, which was 17,5%
market share. Average selling price was $ 38. The company expected to

get

20% market share. The exacted market for this product is 100.000 units. Its
selling price is budgeted at $ 40.
Required :
Prepare a complete various report and analysis consists of :
a. Variable-overhead spending&efficiency variances
b. Fixed-overhead spending & production volume variances
c. Sales price variance
d. Sales volume variance
e. Sales quantity variance
f. Market Share and Market Size Variance
g. The flexible budget variance

Asistensi-6
Revenues, Sales Variances, and Customer-Profitability Analysis
Problem 1
PT Buana Sentosa makes a component for branded LED TVs called X27-A6. This
component is manufactured upon order from the manufacturer of the TV, so PT
Buana Sentosa keeps no inventory. The list price is Rp 750.000,-, but
manufacturer of the TV often receives discount of 5% if it order large enough.
The component is packed in a box that contains 100 pieces of X27-A6. If the
order is not in a multiplier of 100, it is put in a single box (i.e. 245 pieces is
packed in 3 boxes). To retain its relationship with the customer, it uses a policy
that accepts free exchange of defective units within 10 days of delivery.
According to the data, a unit of X27-A6 costs Rp 250.000,-, and the details of
customer level costs are as follows:
Order taking
Rp 1.250.000,- per order
Product handling Rp 750.000,- per box
Warehousing
Rp 450.000,- per day
Rush order processing
Rp 7.000.000,- per rush order
Exchange and repair
Rp 350.000,- per unit
As being detailed below, four biggest customers of PT Buana Sentosa during
2013 are as follows:
LG
Samsung
Sony
Toshiba
No. Of units 15.000
purchased

19.500

16.500

8.500

Discounts
given

10%

10%

10%

No. Of orders

40

23

27

65

No. Of boxes

195

165

85

in 30

22

55

rush 10

21

11

15

Days
warehouse
No. Of
orders

150

No. Of units 30
exchanged

1. Calculate the customer level operating income for these four customers.
Prepare a customer profitability analysis by ranking the customer from most to
least profitable.
2. Does PT Buana Sentosa have unprofitable customers?
Problem 2: (Adapted from UTS 2011-2012)
VITALIFE is a local distributor of herbal medicine products. With the growing
competitiveness in the industry, VITALIFEs new controller, Budi Black, wants to
use ABC system instead of traditional costing to examine individual customer
profitability within each distribution market. He identified there are five activities
related with customer cost: order processing, line item ordering, store deliveries,
carton deliveries, and shelf-stocking. He focuses first on Blue Green Co. Single
store distribution market. Four customers are used to exemplify the insight
availability with the ABC approach. For the February 2012, he listed the following
data for those selected customers:
Anabelle
Pharmacy

Britannia
Apothecary

Chandelier
Pharmacy

Dakar
Store

Drug

Avg. Revenue Rp 5.500.000,- Rp 4.750.000,- Rp 5.200.000,- Rp 5.500.000,per delivery

Avg. Cost of Rp 3.500.000,- Rp 2.135.000,- Rp 4.520.000,- Rp 4.210.000,Goods
Sold
per delivery
Total orders

14

15

10

17

Total
store 10
deliveries

14

Avg. Cartons 15
shipped
per
store delivery

22

13

16

Avg. Hours of 4
shelf stocking
per
store

Avg.
items
order

12

Line 8
per

delivery
He also collects the following information related with customers cost activities:
Activity Area
Cost Driver Rate in 2012
Order Processing

Rp 150.000,- per order

Line Item Ordering

Rp 14.000,- per line item

Store Deliveries

Rp 125.000,- per store delivery

Carton Deliveries

Rp 4.000,- per carton

Shelf Stocking

Rp 75.000,- per stocking hour

Required:
1. Compute customer level operating income using ABC approach for those
selected customers.
2. Based on the above calculations, what opinion should Budi Black consider with
regard to those selected individual customers